Question

The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31: Sales Selling price per pair of skis Variable selling expense per pair of skis Variable administrative expense per pair of skis Total fixed selling expense Total fixed administrative expense Beginning merchandise inventory Ending merchandise inventory Merchandise purchases Amount $ 1,350,000 450 48 17 $ 150,000 105,000 65,000 $ 100,000 $ 285,000 Required: 1. Prepare a traditional income statement for the quarter ended March 31. 2. Prepare a contribution format income statement for the quarter ended March 31. 3. What was the contribution margin per unit? Complete this question by entering your answers in the tabs below. Required 1. Required 2 Required 3 Prepare a traditional income statement for the quarter ended March 31. The Alpine House, Inc. Traditional Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses: $ 1,350,000 250,000

Answer 1

Requirement 1 The Alpine House Inc. Traditional Income Statement Less $ $ $ 1,350,000 250,000 1,100,000 Sales Revenue Cost of goods sold Gross Margin Selling & Administrative Expenses: Selling Expenses Administrative Expenses Net Operating Income 294,000 156,000 $ $ 450,000 650,000 Sales / Selling Price per pair = number of pairs = 1350000/450 = 3000 pair of skis Cost of goods sold = Beginning Bal + Purchases - Ending Bal = 65000+285000-100000 = 250000 Selling Expense = Variable + Fixed = (48 x 3000 units ) + 150000 = 294000 Administrative Expense = Variable + Fixed = (17 x 3000 units) + 105000 =156000 Requirement 2 The Alpine House Inc. Contribution format Income Statement $ 1,350,000 Sales Revenue Variable Expenses Cost of Goods Sold Selling Expenses Administrative Expenses Contribution Margin Fixed Expenses Selling Expenses Administrative Expenses Net Operating Income 250,000 144,000 51,000 $ $ 445,000 905,000 150,000 105,000 $ $ 255,000 650,000 Variable Selling Expense = (48 x 3000 units) = 144000 Variable Administrative Expense = (17 x 3000 units ) =51000 Requirement 3 Contribution Margin per unit = Total Contribution Margin /Total Units = 905000 / 3000 units = $302